I ditched corporate America in 1994 and started a management consulting and venture capital firm (http://petercohan.com). I started following stocks in 1981 when I was in grad school at MIT and started analyzing tech stocks as a guest on CNBC in 1998. I became a Forbes contributor in April 2011. My 11th book is "Hungry Start-up Strategy: Creating New Ventures with Limited Resources and Unlimited Vision" (http://goo.gl/ygaUV). I also teach business strategy and entrepreneurship at Babson College in Wellesley, Mass.

The NRA Industrial Complex

speaking at CPAC in Washington D.C. on February 10, 2011. (Photo credit: Wikipedia)

The July 20 massacre in Aurora, Colo. is just the latest in a string – each of which makes me wonder: Why can’t America keep murder weapons out of the hands of these lunatics? The answer: the NRA Industrial Complex.

Ruger and Glock guns are a common element in a string of recent massacres.

In the Aurora, Colo. massacre that killed 12 and injured 59, alleged shooter James Holmes’ arsenal included two Glock pistols; in January 2011 Jared Lee Loughner shot Gabrielle Giffords in Arizona and 18 others with a 9mm Glock 19 semi-automatic pistol with a 33-round magazine; on July 22, 2011 Anders Behring Breivik murdered 77 in Norway with a semi-automatic Ruger Mini-14 rifle; and in April 2007, Seung-Hui Cho, used a Glock 9 to murder 33 students at Virginia Tech.

Each time we have one of these mass murders, the shooters get enormous publicity. But the makers of weapons — without which these killings would be a deranged individual’s fantasy — seem to benefit. To be fair, the National Rifle Association (NRA) has been scaring gun owners about the imminent threat to their arsenals ever since President Obama took office. The NRA’s tactics have contributed to industry growth.

And that growth has been impressive. After all, according to the National Shooting Sports Foundation between 2008 and 2011, jobs in companies that make, distribute, and sell firearms and ammunition have grown 30% — adding 23,000 direct jobs. The NSSF estimates that the industry’s “direct economic impact” doubled to $13.6 billion in that time.

Not surprisingly, this growth is great news for shareholders of America’s biggest gun manufacturers. Since 2010, Ruger and Smith & Wesson – our two biggest publicly traded gun makers – have enjoyed a 150% rise in stock market value. In May, Ruger’s first quarter earnings more than doubled – and it temporarily stopped taking new orders since first quarter 2012 order had exceeded those for all of 2011.

The Bureau of Alcohol, Tobacco, Firearms and Explosives said that the number of guns made in the US rose 16% between 2010 and 2011 to 6.4 million guns, and the FBI expects to run 17.8 million firearm purchase background checks in 2012 – up 9 % from 2011.

By any measure, the gun industry is outpacing the US economy that has been inching along at a 2% annual rate.

And America can give some of the credit for that to the NRA. Bloomberg reported that the NRA ended 2011 as “a lobbying, merchandising and marketing machine that brings in more than $200 million a year [that] intends to help unseat the incumbent president.”

And the gun industry – led by Ruger – has benefited tremendously from the NRA. According to IRS fillings, from 2004 to 2010, the NRA’s revenue from fundraising — including gifts from gun makers who benefit from its political activism — grew twice as fast as its income from members’ dues.

Over 50 firearms-related companies have given at least $14.8 million to NRA according to its list for a donor program that began in 2005. That was the year NRA lobbyists helped get a federal law passed that limits liability claims against gun makers. Former NRA President Sandy Froman wrote that it “saved the American gun industry from bankruptcy,” according to Bloomberg.

But the key to gun industry growth in the last few years is the NRA’s effort to scare gun owners and stop President Obama from being re-elected. To that end, NRA executive vice president Wayne LaPierre gave a September 2011 speech to the Conservative Political Action Conference in Orlando, Fla., in which he announced “a massive Obama conspiracy to deceive voters and hide his true intentions to destroy the Second Amendment in our country.” LaPierre also said the NRA would work to defeat Obama in 2012.

It comes down to what America values. Do we value the lives of innocent people at movie theaters, malls, and schools? Do we want peace of mind that our children and families will be safe when they are in these so-called soft targets?

Or do we want to make sure that a handful of gun industry executives and shareholders continue to enjoy market-beating profits? Those who favor the current laws argue that giving everyone guns would prevent massacres like Aurora.

One colleague argues, “guns are the great leveler. No longer does oafish brawn mean anything because the smallest person can defend himself or herself. I believe that guns keep us safe from evil people. This is an odd thing. The more guns that are out there being carried the less likely that anyone will ever have to use one because, as I said, evil people are not dumb. They prey on the defenseless. When few are in this category they have little to do.”

But consider what would happen if everyone in a dark movie theater with 300 people had a gun and could use it when Holmes threw the tear gas in. How long would it take before some of the people realized he was the shooter and aimed at him? What if some people woke up to what was happening a little later and started shooting at the people who were shooting at Holmes. It could lead to everyone shooting at everyone else.

Two points: I am not aware of objective proof that letting everyone carry guns and use them in public would lead to less murdering; second, it seems to me that even if everyone could legally carry and use guns in public, not everyone would. Nor would everyone who could use them be skilled enough to figure out in the Aurora case that Holmes was the sole gunman and he could be easily killed by one of the moviegoers – especially given that he had on all that armor.

Ultimately, the NRA’s power comes from the way it spends money to reward politicians, who turn its self-interest into the law of the land and use its money and power to defeat politicians who oppose its will. Guns are an essential ingredient in senseless mass murders like the one in Aurora.

And gun industry money is similarly vital to stifling anyone who dares discuss changes in the law that would keep Rugers and Glocks out of the hands of lunatics like Holmes, Loughner, and Cho.

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